I'm an analyst of technology, the global economy, and far more complex phenomena – my four young children. Through my firm Entropy Economics LLC, I research the growth of the Internet and the broadband networks and applications that drive it. I also study innovation around the world, especially in China, and frequently write about all these topics on the editorial page of The Wall Street Journal. For eight years I advised technology investors as executive editor of the Gilder Technology Report and after that was a senior fellow at the Progress & Freedom Foundation. I'm a scholar at the U.S. Chamber Foundation, a visiting fellow at the American Enterprise Institute's Center for Internet, Communications, and Technology Policy, and am also a trustee and vice-chair of the Indiana Public Retirement System (INPRS). Find me on Twitter @JBSay and @entropyecon.

2/25/2011 @ 1:25PM2,020 views

Cloud Wars Baffle Simmering Cyber Lawyers

Like their celestial counterparts, cyber clouds are unpredictable and ever-changing. The Motorola Xoom tablet arrived on Tuesday. The Apple iPad II arrives next week. Just as Verizon finally boasts its own iPhone, AT&T turns the tables with the Motorola Atrix running on the even faster growing Google Android platform. Meanwhile, Nokia declares its once-mighty Symbian platform ablaze and abandons ship for a new mobile partnership with Microsoft.

In the media world, Apple pushes the envelope with publishers who use iPhone and iPad apps to deliver content. Its new subscription service seeks 30% of the price of magazines, newspapers, and, it hopes, games and videos delivered through its App Store and iTunes.

Google quickly counters with OnePass, a program that charges content providers 10% for access to its Android mobile platform. But unlike Apple, said Google CEO Eric Schmidt, “We don’t prevent you from knowing, if you’re a publisher, who your customers are.” Game on.

Netflix, by the way, saw its Web traffic spike 38% in just one month between December 2010 and January 2011 and is, ho hum, upending movies, cable, and TV.

As the cloud wars roar, the cyber lawyers simmer. This wasn’t how it was supposed to be. The technology law triad of Harvard’s Lawrence Lessig and Jonathan Zittrain and Columbia’s Tim Wu had a vision. They saw an arts and crafts commune of cyber-togetherness. Homemade Web pages with flashing sirens and tacky text were more authentic. “Generativity” was Zittrain’s watchword, a vague aesthetic whose only definition came from its opposition to the ominous “perfect control” imposed by corporations dictating “code” and throwing the “master switch.”

In their straw world of “open” heros and “closed” monsters, AOL’s “walled garden” of the 1990s was the first sign of trouble. Microsoft was an obvious villain. The broadband service providers were of course dangerous gatekeepers, the iPhone was too sleek and integrated, and now even Facebook threatens their ideal of uncurated chaos. These were just a few of the many companies that were supposed to kill the Internet. The triad’s perfect world would be mostly broke organic farmers and struggling artists. Instead, we got Apple’s beautifully beveled apps and Google’s intergalactic ubiquity. Worst of all, the Web started making money.

The real world could not be more dismissive of the anti-commercial ideology. Not so of academia and government. Tim Wu, who coined the term “net neutrality,” is on his way to D.C. to serve a special five-month stint at the Federal Trade Commission. Some speculate he’s developing a case against Google’s advertising “monopoly.” Or perhaps he can assist with the newly opened antitrust investigation into Apple’s infant subscription model. Or maybe boost Level 3’s attempt to wring free bandwidth out of Comcast.

To prevent commercial interests from gatekeeping, leveraging, monopolizing, or profiting (read, succeeding), Wu wants government to segregate all markets. App makers may create software; networks may transfer bits; publishers may offer content; device makers may build tablets and handsets; but no more. You may not draw outside the lines.

Each company, industry, and entrepreneur is quarantined. Ten years ago, Wu’s segregation was the central facet of his net neutrality proposal, the policy just implemented (although in slightly diluted fashion) by the FCC.

Remarkably, Wu acknowledges he isn’t very concerned with real costs, only notional benefits. “The Separations Principle accepts in advance that some of the benefits of concentration and unified action will be sacrificed,” Wu writes, “even in ways that may seem painful or costly.”

More than anyone, Adam Thierer, a fellow at George Mason University’s Mercatus Center, has catalogued and critiqued the triad’s cyber-collectivist program. Wu’s “flippant attitude” toward the real world, writes Thierer, “ignores not only the potential benefits of certain forms of integration but also the fact that his proposed information apartheid would upend the American economy as we know it (for instance, by forcing the breakup of dozens of leading technology companies as well as countless media and entertainment providers).”

The tides of commerce move fastest in the digital world. The microchip is a constant integrator. An iPod becomes an iPhone becomes a converged mobile computer/camera. But the capability and wealth generated by integration and convergence spur new forms of modularity and divergence. Witness the 300,000 modular apps developed for this new general purpose platform.

This autumn Wired magazine proclaimed, “The Web is dead.” Never mind that Google now indexes up to 25 billion Web pages and trillions of individual links. True, Twitter is the current rage for quick linking and commentary, but does anyone think we have a blog shortage? When critics charge that Facebook, the largest virtual community on earth connecting more people than ever before, is a closed system, the terms seem to lose meaning.

In recent days, Wu’s “master switch” has been turned on its head in the Arab world by the “citizen switch.” Don’t the collectivist critics see that in places like Egypt and Libya commercial devices and platforms are being used for civic activism?

Closer to home, a highly educated hedge fund manager starts tutoring his nieces and nephews with a home-made remote Web blackboard. His lessons are so popular and helpful, all the cousins want in. He quits his job and keeps teaching over the Web.

Before long, he has recorded 1,600 bite-sized video lessons on everything from long division to linear algebra, from organic chemistry to monetary policy. Web pessimists, meet Sal Khan. In just a few short years, Khan has put much of history’s basic math and science onto the Web, accessible to the world. No books, no buildings, no busses, no union bosses marching on state capitals. The non-profit Khan Academy is a one-man global school.

How’s that for “generative”?

If you don’t like math for the masses, perhaps you like Angry Birds or Bubble Ball (an addictive game created by a Utah eighth-grader). Either way, evidence that corporate behemoths are stifling creativity in the cyber world is difficult to find.

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Bottom line: the cyber-collectivists want all the benefits of modularity at the edge without the necessary counterpart of integration in the core –- a bigger-bandwidth network, a cloud-based advertising platform, a new subscription service tied to the iPad. New platforms are themselves a crucial form of innovation. But Wu wants any money-making platform to be converted by the government into a non-profit utility. Which would only guarantee failure to invest in the platforms of the future.